The 2010 Minnesota legislative session began February 4th and ended May 17 after twists, turns, turmoil, and a very brief special session. Electoral politics colored the 2010 session, and many choices were made with one eye on the upcoming elections. Every seat in the Legislature will be on the ballot in November and several legislators were angling for their party’s gubernatorial endorsement as well. A range of issues were debated, with over 2,000 bills introduced during the session, but the state’s ongoing budget issues dominated the action at the Capitol.

The budget battle actually began at the end of the 2009 session, when the DFL-controlled legislature and Gov. Pawlenty were unable to agree on a balanced budget for the current biennium, which runs from July 1, 2009 to June 30, 2011. At the end of the 2009 session the governor announced that he would use his unallotment authority to balance the budget. But shortly before the 2010 session began, a Ramsey County district court order undid the governor’s unallotment of a small nutrition program and cast doubt on the constitutionality of the governor’s actions. The case was appealed to the Minnesota Supreme Court, which set an oral argument date in mid-March.

In addition to the unsettled unallotment case, lower-than-expected revenues left lawmakers facing a fresh, billion-dollar budget shortfall as the session began. But before dealing the budget, the legislature continued its even-numbered-year tradition of passing a large bonding bill. In the governor’s February 11 State of the State speech he called on legislators to pass “an affordable, reasonable, and focused” bonding bill. The legislature responded by passing a $1 billion package. The governor then used his line-item veto authority to slice more than $300 million worth of projects from the bill.

On March 15, the same day that the governor trimmed the bonding bill, the Minnesota Supreme Court heard oral arguments in the unallotment case. The court issued its decision on May 5. The 4-3 decision held that the governor had overused his unallotment authority for the nutrition program at issue, and effectively undid all of the other unallotments. As a result, lawmakers were faced with a $3 billion budget hole and less than two weeks to go before the session deadline.

The DFL-controlled legislature made the first move, passing a budget-balancing bill that included a new fourth-tier income tax that would have raised $400 million. The governor promptly vetoed the bill. No override was attempted. Negotiations resumed and continued throughout the final weekend of the session. Finally, a last-minute deal was reached. The compromise included most of Gov. Pawlenty’s 2009 unallotments but did not include any new tax revenue. The state’s budget problems continue, however, and fiscal issues will dominate the 2011 session as well, with the state facing a multi-billion dollar deficit for the upcoming biennium.

The MSBA Agenda

Judicial Selection Reform
The MSBA’s top issue this session was judicial selection reform. The Bar, along with its partners in the Coalition for Impartial Justice, made a strong push for HF224/SF70, carried by Sen. Ann Rest (DFL-New Hope) and lawyer-legislator Rep. Steve Simon (DFL-St. Louis Park). The proposal would have created a nonpartisan judicial evaluation commission and enabled voters to determine judges’ futures through retention elections. The bill attracted a broad range of supporters, including perhaps the Capitol’s most unlikely pairing: the Minnesota Chamber of Commerce and the Minnesota AFL-CIO. The effort drew much media coverage and included a visit from former U.S. Supreme Court justice Sandra Day O’Connor. The bill advanced through several committees in both chambers, but ultimately did not get a floor vote. It was alive at the end of session but was swept away in the budget debate.

Justice System Funding
The second major issue for the MSBA was fighting for adequate funding for the justice system, including courts, public defenders, and civil legal services. Although any cut is painful, the justice system fared relatively well in light of the initial level of proposed cuts and compared to cuts to other areas of state spending. The final compromise included the following funding reductions:

Supreme Court Operations: Reduces the FY10 appropriation by $339,000 and the FY11 appropriation by $688,000.

Court of Appeals: Reduces the FY10 appropriation by $107,000 and the FY11 appropriation by $217,000.

District Courts: Reduces the FY10 appropriation by $2,732,000 and the FY11 appropriation by $5,549,000 (while requiring that existing drug courts be maintained at their current levels).

Tax Court: Reduces the FY10 appropriation by $12,000 and the FY11 appropriation by $25,000.

Civil Legal Services: Reduces the FY10 appropriation by $140,000 and the FY11 appropriation by $284,000.

Board of Public Defense: Reduces the FY10 appropriation by $591,000 and the FY11 appropriation by $1,302,000.

ADR Section: Chapter 264
Chapter 264 is a revised version of the Uniform Arbitration Act. The bill, which was promoted by the Uniform Law Commission, was shaped with extensive input from the ADR Section. The result addresses many gaps in the current Uniform Arbitration Act. Most sections are effective August 1, 2011; one section is effective August 1, 2012. The bill was carried by lawyer-legislators Sen. Mary Olson (DFL-Bemidji) and Rep. Terry Morrow (DFL-St. Peter).

Business Law Section: Chapter 250
Chapter 250 came from the MSBA Business Law Section and was carried by lawyer-legislators Sen. Ron Latz (DFL-St. Louis Park) and Rep. Dave Olin (DFL-Thief River Falls). This act includes technical clean-up of the Minnesota Business Corporations Act and parallel changes to the Minnesota Nonprofit Incorporation Act. These provisions are effective August 1, 2010. Chapter 250 also corrects a drafting error in a 2008 law that broadened the purpose of limited liability companies to include any “lawful” purpose rather than just a “business” purpose. That law made the change applicable only to LLCs formed on or after the effective date of January 1, 2009. Chapter 250 makes the change retroactive.

Probate Section: Chapter 334
Chapter 334 originally contained three recommendations from the Probate Section of the MSBA. Additional provisions were added during the session to address issues related to the repeal of the federal estate tax. An original portion of the act clarifies that distributions of short-term and long-term capital gains by regulated investment companies and real estate investment trusts will be treated as distributions of principal for trust accounting purposes. In addition, Chapter 334 provides a procedure for appointing a temporary or emergency conservator, modeled after the existing emergency guardian statute. The final original portion of the act defines parental relationships for inheritance rights when a person dies without a will or when a trust references intestacy laws. The object is to bring intestacy laws up-to-speed with the current Parentage Act.
Other provisions were added to Chapter 334 to address issues created by the 2010 repeal of the federal estate tax. Many wills and trusts reference terms or concepts that are defined in now-repealed federal provisions, causing potential ambiguity and unintended results in wills and trusts for decedents who die in 2010. In the Senate Judiciary Committee an amendment was added that creates a default rule of interpretation for decedents who die in 2010: unless a contrary intent is manifest in the will or trust, any reference to a term defined in the repealed federal provisions is deemed to refer to the provisions in effect on December 31, 2009. This provision applies only to wills and trusts of decedents who die in 2010, and is retroactive to January 1, 2010.

Another provision was added in the House Taxes Committee to address qualified terminable interest property (“QTIP”) trusts in Minnesota. Federal estate tax law allows a QTIP election to be made for assets set aside in a trust for the surviving spouse, as long as the trust entitles the surviving spouse to all income during lifetime. A decedent’s estate could not make the QTIP election on a Minnesota return if no federal election was made, but there is no federal estate tax required in 2010. Chapter 334 allows a Minnesota estate to make the QTIP election on a Minnesota return for the amount of the estate in excess of $3.5 million, with the estate paying an immediate Minnesota estate tax on the difference between the $1 million exemption and the excess up to $3.5 million.

Real Property Section: Chapters 211, 233, and 267
The Real Property Section brought forward three proposals during the 2010 session. Chapter 211 clarifies the mortgage registry tax on mortgages that secure less than the full amount of the debt. For example, a $5 million note may be secured by $1 million in real estate and $4 million in equipment. This bill preserves the validity of these mortgages up to the amount of the debt for which tax has actually been paid. The changes are effective July 1, 2010, and apply to instruments executed or recorded on or after that date. The bill was authored by lawyer-legislators Sen. Linda Scheid (DFL-Brooklyn Park) and Rep. Gail Kulick Jackson (DFL-Milaca).

Chapter 233 adds supplemental declarations to the list of documents that can be recorded against common interest community certificates of title. The act also replaces erroneous cross-references with substantive definitions of certain contract-for-deed terms. The cross-references being eliminated are to a section of statute that does not currently exist, but was included in a bill during the 2009 session that ultimately was not enacted. The definitions are taken from that bill and reflect what would have been the law had last year’s bill been enacted. This bill was also carried by Sen. Scheid and Rep. Jackson.
Chapter 267 was the product of a special committee within the Real Property Section and was carried by Rep. Jackson and fellow lawyer-legislator Sen. Ron Latz (DFL-St. Louis Park). It provides a “50,000 mile tune-up” for the Minnesota Common Interest Community Ownership Act, with helpful provisions for builders, owners, and lenders.

Other Notable Legislation

Chapter 192
Chapter 192 prohibits live check solicitation (i.e., checks received in the mail that result in the purchase of a good or service when cashed or deposited). Effective date: August 1, 2010. Chapter 214
Chapter 214 adds an exception to the law that prohibits government authorities from accessing a financial institution customer’s records. Under the act, such records can be disclosed in response to a judicial or administrative subpoena. Effective date: Retroactive to August 1, 2009. Chapter 224
Chapter 224 offers immunity to certain entities that volunteer to assist the state or a local unit of government during a disaster. Immunity from civil actions or administrative sanctions applies if the entity is under the direction and control of the jurisdiction. Immunity would not apply for willful and wanton or reckless acts. Effective date: April 11, 2010. Chapter 231
Under Chapter 231, a pretrial filing of a law enforcement vehicle recording is not a prerequisite for admission of the evidence in a criminal trial or DWI license revocation hearing. Effective date: July 1, 2010. Chapter 236
Chapter 236 makes it optional, rather than mandatory, that presentence investigations of felony, controlled substance violations include a description of any adverse social or economic effects on people who reside in the neighborhood where the offense was committed. Effective date: August 1, 2010. Chapter 235
Chapter 235 specifies that advertising deceptive local telephone numbers and geographically deceptive business names is a deceptive trade practice. To be considered to be located within the advertised geographic area, at least one owner or employee of the business must regularly perform services for the business at the advertised location. Effective date: August 1, 2010. Chapter 237
Chapter 237 allows for a longer redemption period and longer foreclosure sale postponement for some properties. The act was effective May 15, 2010, and applies to foreclosure sales scheduled on or after that date. Chapter 240
Chapter 240 modifies certain requirements that apply to business-screening services (private entities that collect and disseminate criminal records). The act requires disseminated records to reflect a complete and accurate record, and requires the deletion of records found to be sealed, expunged, or the subject of a pardon. Effective date: July 1, 2010. Chapter 251
Chapter 251 makes two amendments to the predatory offender registration law. First, it prohibits predatory offenders from listing homeless shelters that as their primary or secondary address. Effective date: July 1, 2010. Second, it clarifies that a person’s duty to register is reactivated when the person returns to the state after having lived outside of the state, if the person’s registration period has not expired. Effective date: April 16, 2010. Chapter 254
Chapter 254 provides that only a court, rather than a guardian, may declare a person’s health care directive unenforceable. The act also modifies certain informational reports that must be submitted to the court by a guardian or conservator. This act was effective April 16, 2010, and applies to petitions filed and protective orders issued on or after August 1, 2010, or earlier if directed by the court. Chapter 256
Chapter 256 authorizes courts to issue an order to show cause why an offender who should have been ordered to submit a DNA sample, but did not, should be ordered to provide one, even after expiration of the offender’s sentence. Effective date: August 1, 2010. Chapter 263
Chapter 263, the Uniform Foreign-Country Money Judgments Act, provides updated rules and procedures for the recognition of foreign judgments. Effective date: August 1, 2010 for all actions commenced on or after that date. Chapter 268
Chapter 268 modifies laws relating to guns on school property.

Increases the penalty for knowingly possessing, storing, or keeping a dangerous weapon on school property from a two- to a five-year penalty.

Decreases the penalty for using or brandishing a replica firearm or BB gun on school property from a two-year felony to a gross misdemeanor.

Decreases the penalty for possessing, storing, or keeping a replica firearm or a BB gun on school property from a gross misdemeanor to a misdemeanor.

Effective date: August 1, 2010 for crimes committed on or after that date.

Chapter 281
Chapter 281 modifies judicial proceedings for children in need of protection or services. Effective date: August 1, 2010. Chapter 288
Chapter 288 rescinds exemptions from several eminent domain provisions that current law allows to utilities for pipelines and high-voltage electric transmission lines. Effective date: May 1, 2010 for eminent domain proceedings or actions commenced on or after that date. Chapter 292
Current law prohibits intentionally causing bodily harm to a service animal when it is in the custody of the person it serves. Chapter 292 expands the prohibition of harming a service animal to include rendering the animal unable to perform its duties. The act provides that rendering a service animal unable to perform its duties is a gross misdemeanor, and requires the court to order mandatory restitution for the costs and expenses resulting from the harm caused to service animals. Effective date: August 1, 2010. Chapter 293
Chapter 293 creates a felony for unlawfully possessing devices used to acquire information from payment cards. Effective date: August 1, 2010. Chapter 295
Chapter 295, the Uniform Unsworn Foreign Declarations Act, permits, in state court proceedings, unsworn declarations to be executed by witnesses outside the United States. Effective date: August 1, 2010. Chapter 297
Chapter 297 establishes an administrative remedy for Data Practices Act complaints, administered by the Office of Administrative Hearings. Following a hearing, the assigned judge must make at least one of the following dispositions: (1) dismiss the complaint; (2) find a violation; (3) impose a civil penalty up to $300; (4) issue an order compelling compliance with the violated law; (5) refer the complaint to the appropriate prosecuting authority for consideration of criminal charges. Effective date: July 1, 2010. Chapter 299
Ch 299 contains a number of domestic abuse provisions that are effective August 1, 2010, including:

Extending the area for protection to a reasonable area around the residence or dwelling of a person seeking an ex parte domestic abuse order for protection.

Creating a stalking offense for repeated text messaging.

Allowing pets to be included in protection orders.

Chapter 300
Chapter 300 modifies and clarifies commitment statutes for sexually dangerous persons and those with sexual psychopathic personalities. Effective date: August 1, 2010. Chapter 309
Chapter 309 establishes a state guardian ad litem board. The board will consist of seven members. The Minnesota Supreme Court appoints three members, including two attorneys admitted to practice law in the state, and one public member. The other four members are appointed by the governor. Effective date: July 1, 2010. Chapter 315
Chapter 315 contains several modifications to landlord-tenant law, including:

Requiring receipts for cash payments.

Providing for recovery of attorney fees for tenants if the lease states landlords can recover attorney fees.

Prohibits landlords from charging fees for late rent payments unless the two parties have agreed in writing that such a fee may be imposed.

Requiring landlords to provide prospective tenants with a written disclosure before accepting a screening fee. The disclosure must list the criteria on which the rental decision will be based. If an applicant is rejected, the landlord must provide to the rejected applicant the criteria the applicant failed to meet.

Enacting new notice requirements for eviction actions when a tenant remains in a property after the time for redemption has expired.

Effective date: various.

Chapter 318
Chapter 318 authorizes a sheriff to charge a room-and-board fee to an inmate who is convicted of a crime, for time the inmate spends in jail before conviction for which the court grants credit for time served. Effective date: August 1, 2010. Chapter 321
Chapter 321 modifies the lead-clean-up requirements in the state building code. It requires that firms performing remodeling work on residential property or child-occupied facilities constructed before 1978 must be certified to perform lead work under federal Environmental Protection Agency regulations. Effective date: February 1, 2011. Chapter 324
Chapter 324 prohibits residential roofers from promising to rebate an insurance deductible. Effective date: August 1, 2010. Chapter 330
Chapter 330 clarifies detention placement options for extended jurisdiction juveniles pending revocation hearings. Offenders may be detained in a secure juvenile detention facility, or, with certain exceptions, in an adult jail for up to 24 hours. Effective date: August 1, 2010. Chapter 343
Chapter 343 modifies existing law related to consumers and building contractors. Among other things, the act:

Expands and clarifies existing law to allow contractors to make claims against a dissolved subcontractor or supplier that may have been the cause of the problem.

Rewrites existing laws that govern the sequence of what is required to happen when a homeowner discovers a construction defect after the work is completed.

Allows builders to make a written proposal to the homeowner to repair or replace the defective work. If the sides agree, the contractor must complete the work and give the homeowner a written notice of completion. If the builder and homeowner do not reach an agreement, the act requires use of a dispute resolution process.

Permits the homeowner to sue the builder, if the builder does not inspect the alleged damage, does not offer to make a repair, or does not perform an agreed-to repair.

Under existing law, the builder’s liability does not include damage not reported in writing to the builder within six months after the homeowner discovered it or should have discovered it. This section adds an exception if the homeowner establishes that the builder had actual notice of the defect.

Effective date: January 1, 2001.

Chapter 349
Chapter 349 prohibits the licensure of chiropractors convicted of felony-level criminal sexual offenses. Licenses denied or revoked under this section cannot be reinstated. Effective date: August 1, 2010. Chapter 354
Chapter 354 clarifies the duties of property tax assessors, including their ability to testify in court proceedings. Effective date: various. Chapter 366
Chapter 366 increases the license revocation period for repeat DWI offenders, and provides for longer revocation periods for offenders with blood alcohol percentages of twice the legal limit (0.16) or more. In addition, the bill makes the ignition interlock pilot program permanent. Now, repeat offenders and first-time offenders with alcohol concentrations of twice the legal limit or higher will have to use an ignition interlock device to drive legally in Minnesota. Effective date: various. Chapter 368
Chapter 368 establishes a crime for the sale of or possession of salvia divinorum, a psychoactive plant. Effective date: August 1, 2010. Chapter 371
Chapter 371 prohibits private real property transfer fees. Effective date: May 20, 2010. Chapter 375
Chapter 375 provides various new foreclosure requirements, including requiring the foreclosure notice be printed on colored paper that is a different color than other required notices. The act also specifies information that must be included on the notice of redemption rights. Effective date: August 1, 2010. Chapter 378
Chapter 378 adopts the new Interstate Compact for Juveniles, which provides for the tracking and supervision of juveniles moving across state borders. Chapter 391
Chapter 391 makes numerous changes to forfeiture laws. Among other things, the act:

Requires officers to give forfeiture receipts.

Prohibits sales of forfeited property to employees of law enforcement agencies or their family members.

Allows certain forfeiture cases to be heard in conciliation court if the money or personal property involved is $15,000 or less.

Requires the Peace Officers Standards and Training Board to develop a model policy that articulates best practices for forfeitures, and requires every prosecution office and the chief law enforcement officer to adopt and implement a written policy on forfeitures that is identical or substantially similar to the applicable model policy.

Requires county attorneys to send notice of intent to forfeit property within 60 days from when seizure occurs. Allows the county attorney to petition the court for an additional 90 days for good cause.

Requires county attorneys to certify the following before property may be forfeited administratively: (1) the seizing agency provided an evidence or forfeiture receipt; (2) proper notice was timely served; and (3) probable cause for the forfeiture exists based upon the officer’s statement.

Effective date: various.

Chapter 397
Chapter 397 modifies Minnesota’s campaign finance laws. The new requirements pertain to independent expenditures (i.e., money spent on mailings, billboards, and advertisements that advocate the election or defeat of a candidate without coordinating with any campaign). The act requires disclosure of donors and spending at least four times before elections. Corporations are still prohibited from giving directly to candidates or political parties in Minnesota. Effective date: June 1, 2010.

Bryan T. Lake is government relations director for the Minnesota State Bar Association. As such, he works to support MSBA’s legislative agenda at the Capitol, maintains liaison with MSBA sections regarding their legislative concerns, and during the Session edits the weekly “Capitol Notes” newsletter, online athttp://www.mnbar.org/committees/legislative/">http://www.mnbar.org/committees/legislative/ He is a 2008 graduate of the William Mitchell College of Law.